Apple aggressively lobbies against Arizona bill that would allow third-party App Store pay...

Posted:
in General Discussion edited March 1
Apple and Google are ramping up lobbying efforts against an Arizona bill that would allow developers to use third-party in-app payments methods, bypassing the tech giants' 15% or 30% cut of digital sales.

App Store


Arizona State Rep. Regina Cobb, a co-sponsor of the HB2005 amendment, told Protocol that Apple and Google began intense lobbying activities before the bill was formally introduced in February.

"We went through a very difficult weekend where Apple and Google hired probably almost every lobbyist in town," Cobb said.

Apple's senior manager of state and local government affairs Rod Diridon, who successfully lobbied against a California right to repair bill in 2019, was reportedly called in to assist with the Arizona legislation. The iPhone maker also joined the Arizona Chamber of Commerce and hired Kirk Adams, former chief of staff to Arizona Gov. Doug Ducey and speaker of the Arizona House of Representatives, to discuss the amendment with Cobb, the report said.

Lawyers for both Apple and Google argued the constitutionality of the bill with the Arizona House's lawyers.

Cobb said she was presented with the idea for HB2005 in February by Ryan O'Daniel, a local lobbyist who represents Match Group and the Coalition for App Fairness. The bill would enable developers to tap third-party payment systems instead of those offered by Apple and Google in their respective App Store and Google Play Store marketplaces.

Apple's chief compliance officer, Kyle Andeer, at a hearing last week said that HB2005 amounts to a "government mandate that Apple give away the App Store," the report said. Andeer added that the bill "tells Apple it cannot use its own checkout lane and collect a commission in the store we built."

The Arizona legislation is similar to a more wide reaching bill that failed in North Dakota last month. That proposal dealt not only with third-party payment systems, but also demanded alternative app stores for smartphone users.

With its bill focusing solely on payments, Arizona's attempt to rein in powerful tech firms might have a chance at passing a full House vote. If adopted, large developers looking to avoid app store "taxes" would likely flock to the state.

Cobb plans to discuss the bill this week with Apple executives at a meeting arranged by Adams, the report said.

"It's time to make some concessions," Cobb said. "I'm sure other states are going to be watching from the sidelines. On both sides, I think they're going to start navigating a little bit more precisely after they've been able to gain knowledge from this experience in Arizona."
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Comments

  • Reply 1 of 44
    genovellegenovelle Posts: 1,087member
    Apple can just go back to removing the mechanism for in app purchases altogether for 3rd applications. Unfortunately the good would have to suffer for the greedy. Then a consortium of Small app designers should sue Epic and others for creating the environment by their selfish greed. 
    jas99bshanktenthousandthingspulseimageswatto_cobrajony0
  • Reply 2 of 44
    roakeroake Posts: 735member
    Can Apple just turn off developer accounts in Arizona?  That would suck for the developers, but it would contain the problem.
    pulseimageswatto_cobrajony0
  • Reply 3 of 44
    baconstangbaconstang Posts: 660member
    Apple could institute a service charge for free apps with in app purchases.  Base it on the size of the download.
    Or stuff them with ads for Apple gear.
    bshankpulseimageswatto_cobra
  • Reply 4 of 44
    I’d rather not see this effort by the Coalition for App Fairness succeed. I believe platform owner rights should be above platform user rights. However, this aspect of the AppStore is very unpopular. Particularly since there are only two major competitors in the space which causes a degree of lock in. I would love for Apple to find a better middle ground, however I side with Apple on this.

    One idea is cross-platform licensing agreements with other stores such as Google and Microsoft to reduce platform lock-in. If you buy a cross-platform app or game on one store, you get it on the other platforms if developers opt in. Possibly allow developers to do this in their own implementation without help from the store or Apple could include a licensing API that could be used from the other stores app to transfer a license to or from the Apple App Store.

    Another idea would be to allow something between a web app and a native app that must conform to higher security requirements, but can be distributed (or cached) outside the App Store. Basically native APIs but web-like distribution and behavior. No app review (just notarization). Some platform features may not be available in this format.
    edited March 2
  • Reply 5 of 44
    I hope the bill succeeds. It’s time these giant tech companies and their lobbyist start to abide to free market values. 
    These ‘stores’ are marketed as stores, but are in fact monopolist, world-wide gatekeepers to content distribution, especially Apple.
    The irony is that ‘free market values’ made them so big to begin with, but with everything, there should be rules and measures in place to safeguard balance and competition.
    williamlondonFoodLoverPezaLink648099darkvader
  • Reply 6 of 44
    mwhitemwhite Posts: 255member
    I hope the bill succeeds. It’s time these giant tech companies and their lobbyist start to abide to free market values. 
    These ‘stores’ are marketed as stores, but are in fact monopolist, world-wide gatekeepers to content distribution, especially Apple.
    The irony is that ‘free market values’ made them so big to begin with, but with everything, there should be rules and measures in place to safeguard balance and competition.

    BrainFreeze not CheeseFreeze....
    applguywilliamlondonbeowulfschmidtDogpersonpulseimagesStrangeDaysroundaboutnowwatto_cobrabaconstang
  • Reply 7 of 44
    davidwdavidw Posts: 1,132member
    Apple could institute a service charge for free apps with in app purchases.  Base it on the size of the download.
    Or stuff them with ads for Apple gear.
    But only if the in-app purchases don't use iTunes as payment. And it shouldn't be based on size of download but on a per download basis. The service charge is paid by the developers and would be on a sliding scale. As the number of downloads goes up, the service charge per download is reduced. Plus the app expires after a month or a year and customers would have to re-download or renew the app at that time. And the developers will incur another service charge. iTunes will keep track of this, like it does any app, free or otherwise. 

    But also, developers can still have a free app with in-app purchases in the Apple App Store, if the in-app purchase goes through iTunes, like it does now.

    So developers can choose to pay Apple a certain amount up front and hope the saving from not having to pay the Apple a commission on in-app purchases more than make up for the upfront cost of having to pay a service charge for each download of the app.

    Or choose to have a free app and pay Apple a commission, where the developers know they will not lose any money, no matter how little they make from in-app purchases.

    Or have both and let their customers decide. Many might still want to pay with their iTunes account, even if with the other way, the in-app purchases might be cheaper. Either way, the iOS customers do not have to pay for the app, that has in-app purchases.  
    edited March 2 watto_cobra
  • Reply 8 of 44
    22july201322july2013 Posts: 2,001member
    I hope the bill succeeds. It’s time these giant tech companies and their lobbyist start to abide to free market values. 
    These ‘stores’ are marketed as stores, but are in fact monopolist, world-wide gatekeepers to content distribution, especially Apple.
    The irony is that ‘free market values’ made them so big to begin with, but with everything, there should be rules and measures in place to safeguard balance and competition.
    I also hope the bill succeeds, but for a different reason entirely. 

    Since it is inevitable that some jurisdiction in the world will pass a law making at least one of Apple's App Store Guidelines illegal, we might as well find out sooner rather than later what Apple will do in such a jurisdiction. I am eager to learn what Apple's strategy will be if it loses. I see four possible responses: 

    (a) will Apple change its policies worldwide to comply with Arizona, (eg, prohibit free in-app purchases world-wide) or
    (b) will Apple simply change its policies in that state only to comply with Arizona, (eg, find a way to implement this in Arizona only) or
    (c) will Apple give up doing business in Arizona (at least in-app purchases [but maybe all sales of Apple products and Services if Apple wants to really fight back]) so that it doesn't have to abide by (or break) that policy? or
    (d) will Apple provide a documented way for users to switch to a different OS so that Apple can argue (I'm not sure if Arizona would think this would be acceptable) that there is now a way for users to avoid paying in-app fees. After all, many of the same apps are available on both Apple's and Google's app stores. So that could be a legitimate argument for Apple to use.

    Arizona is a very small jurisdiction, so it's an excellent testing ground for this to occur. I really don't know which of these three options Apple will pick, but I'm hoping for (c) or (d). 

    Remember that this law has nothing to do with iOS. The implementation for Arizona's requirement requires changes on Apple's servers. There's no way to implement this feature within iOS alone. This law is all about Apple's online services, not its operating system. It is very curious that Arizona's law requires something rather than restricts Apple from doing something. Arizona's law is a law that requires a certain action, not prohibit one. It's like saying "You must sell a green iPhone." There are many reasons why Apple might decide to refuse to sell a green iPhone. Because it's a requirement law rather than a restriction law, Apple's only response to fight this law might be to stop doing all business in Arizona, which is why option (d) may not suffice.

    It is inevitable that somewhere the law will change to impact Apple's products or services. But Apple's reply should be "But I am Apple". To see this in video form, watch the following video:



    cropr
  • Reply 9 of 44
    qwerty52qwerty52 Posts: 267member
    I hope the bill succeeds. It’s time these giant tech companies and their lobbyist start to abide to free market values. 
    These ‘stores’ are marketed as stores, but are in fact monopolist, world-wide gatekeepers to content distribution, especially Apple.
    The irony is that ‘free market values’ made them so big to begin with, but with everything, there should be rules and measures in place to safeguard balance and competition.

    You are completely wrong. Apple became big, because of its successful hardwares brought to the market, not because of the “store”. The AppStore came later. And yes, it is successful too, but only because of the hardware. No good hardware, no AppStore!
    mwhiteigorskyionicleStrangeDaysviclauyycwatto_cobrabaconstang
  • Reply 10 of 44
    fred1fred1 Posts: 727member
    Please stop whining Representative Cobb. You all got your bags of cash from the lobbyists which is why you wanted to be elected in the first place. 
    randominternetpersonDogpersonviclauyycbaconstangMacProwatto_cobra
  • Reply 11 of 44
    Doesn’t this fall under interstate commerce which only the federal government can regulate? The tech involved here is not limited to Arizona’s borders only. 
    randominternetpersonbaconstangwatto_cobrachasm
  • Reply 12 of 44
    PezaPeza Posts: 130member
    I personally don’t see the problem with this bill,  but I’m not gunning for Apple to increase its massive multi billion dollar profits by every cent they can get either. I’d rather it gives something back to the end users and customers and allow freedom of choice.
    The American justice system is daft though, basically lobbyists are there to bribe the politicians right? So one bribes for one thing whilst the other bribes for the opposite?

    I have no doubt Apple will win though with its huge power and influence it has. 
  • Reply 13 of 44
    croprcropr Posts: 1,034member

    (a) will Apple change its policies worldwide to comply with Arizona, (eg, prohibit free in-app purchases world-wide) or
    (b) will Apple simply change its policies in that state only to comply with Arizona, (eg, find a way to implement this in Arizona only) or
    (c) will Apple give up doing business in Arizona (at least in-app purchases [but maybe all sales of Apple products and Services if Apple wants to really fight back]) so that it doesn't have to abide by (or break) that policy? or
    (d) will Apple provide a documented way for users to switch to a different OS so that Apple can argue (I'm not sure if Arizona would think this would be acceptable) that there is now a way for users to avoid paying in-app fees. After all, many of the same apps are available on both Apple's and Google's app stores. So that could be a legitimate argument for Apple to use.

    Interesting list of options.   My remarks.  
    Apple will try to avoid (a) at all costs.
    (b) and (c) are only feasible if the region is small.  If the EU would issue such a requirement (the chances are there), Apple cannot afford to give up its EU business. 
    (d) does not solve the issue, as it targets the users and not the developers.  A user does not care of the developer has to pay 30% to Apple or Google.  And many apps make only sense if the app is available on all relevant platforms.  The e-voting app I have developed is such a case:  one cannot organize an election if not all users, independent of their device,  can vote,
    For me there are 2 solutions: 
    (i) the App Store business is split from Apple into a separate company, meaning that Apple will also have to pay the 30% cut to that company.
    (ii) Apple breaks the linking of the technical App Store guidelines and the approval (security, look and feel,  APIs) from the business related guidelines (the 30% cut and others).  If you don't think it is feasible, just look at the Mac App Store.
    muthuk_vanalingam
  • Reply 14 of 44
    I'm happy to see states push back against Big Tech overreach. It's the only way currently when the feds refuse to act.

    I hope to see more of this as time goes on. Someone has to do it.
    darkvader
  • Reply 15 of 44
    Peza said:
    I personally don’t see the problem with this bill,  but I’m not gunning for Apple to increase its massive multi billion dollar profits by every cent they can get either. I’d rather it gives something back to the end users and customers and allow freedom of choice.
    The American justice system is daft though, basically lobbyists are there to bribe the politicians right? So one bribes for one thing whilst the other bribes for the opposite?

    I have no doubt Apple will win though with its huge power and influence it has. 
    I think you’re missing the point. Apple provides the platform, coding language and storage for these apps. Before the App Store and its ilk, it cost a developer much more to develop and distribute software, often requiring physical media in the past. 

    Why should Apple provide all those services for free? Can you go up a to a public storage facility and tell them you want to leave your stuff there but not pay them for the it? Can you ask a store to sell your products without taking a cut of the profits of being paid for their shelf space? Of course not. Why should Apple have to do these things?
    edited March 2 DogpersonStrangeDaysviclauyycwatto_cobra
  • Reply 16 of 44
    darkvaderdarkvader Posts: 461member
    As I've said many times, once I've bought it it's MY iPhone, not Apple's iPhone.

    Stopping me from installing apps from any source I choose on MY iPhone should absolutely be illegal.

    I don't care what Apple charges on their app store.  I don't care if they want 30% of in-app purchases from apps installed via their app store.  But I should be able to go to developersite.com or someotherappstore.com and install an app directly, and Apple should have zero control of that.
  • Reply 17 of 44
    lkrupplkrupp Posts: 8,881member
    Arizona, the new California. The conspiracy theories are true about people leaving California because of its radical left-wing, anti-business laws and policies and moving to Arizona and Texas only to bring that tripe with them when they vote.
  • Reply 18 of 44
    mhgmhg Posts: 2member
    The 30% (or 15%) fee on every transaction feels steep from outside, but understanding what that offers an independent developer really is a game changer. Remember the old days when you had to pay through the nose for a distribution deal, and you were lucky to take even a 30% cut as a developer? 
    randominternetpersonStrangeDaysviclauyycbaconstangwatto_cobra
  • Reply 19 of 44
    I’d rather not see this effort by the Coalition for App Fairness succeed. I believe platform owner rights should be above platform user rights. However, this aspect of the AppStore is very unpopular. Particularly since there are only two major competitors in the space which causes a degree of lock in. I would love for Apple to find a better middle ground, however I side with Apple on this.

    I highly doubt that.  99.9% of consumers couldn't care less about this issue and see no benefit from having multiple different payment schemes.  Obviously some (very large) companies see this as a way to increase their profits, but this doesn't make it "very unpopular."
    baconstangwatto_cobraDetnator
  • Reply 20 of 44
    igorskyigorsky Posts: 493member
    Peza said:
    I personally don’t see the problem with this bill,  but I’m not gunning for Apple to increase its massive multi billion dollar profits by every cent they can get either. I’d rather it gives something back to the end users and customers and allow freedom of choice.
    The American justice system is daft though, basically lobbyists are there to bribe the politicians right? So one bribes for one thing whilst the other bribes for the opposite?

    I have no doubt Apple will win though with its huge power and influence it has. 
    I think you’re missing the point. Apple provides the platform, coding language and storage for these apps. Before the App Store and its ilk, it cost a developer much more to develop and distribute software, often requiring physical media in the past. 

    Why should Apple provide all those services for free? Can you go up a to a public storage facility and tell them you want to leave your stuff there but not pay them for the it? Can you ask a store to sell your products without taking a cut of the profits of being paid for their shelf space? Of course not. Why should Apple have to do these things?
    Nobody would expect McDonald's to allow Wendy's to sell burgers in their stores, let alone for free. So I'm not sure why so many are trying to impose this on Apple.
    edited March 2 80s_Apple_GuyStrangeDayswatto_cobrachasmDetnator
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